Correlation Between Gome Telecom and Digital China
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By analyzing existing cross correlation between Gome Telecom Equipment and Digital China Information, you can compare the effects of market volatilities on Gome Telecom and Digital China and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gome Telecom with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Digital China.
Diversification Opportunities for Gome Telecom and Digital China
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gome and Digital is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information and Gome Telecom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gome Telecom Equipment are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of Gome Telecom i.e., Gome Telecom and Digital China go up and down completely randomly.
Pair Corralation between Gome Telecom and Digital China
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to under-perform the Digital China. In addition to that, Gome Telecom is 1.17 times more volatile than Digital China Information. It trades about -0.06 of its total potential returns per unit of risk. Digital China Information is currently generating about 0.02 per unit of volatility. If you would invest 1,086 in Digital China Information on August 30, 2024 and sell it today you would earn a total of 100.00 from holding Digital China Information or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Digital China Information
Performance |
| Timeline |
| Gome Telecom Equipment |
| Digital China Information |
Gome Telecom and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Digital China
The main advantage of trading using opposite Gome Telecom and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom position performs unexpectedly, Digital China can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Digital China will offset losses from the drop in Digital China's long position.| Gome Telecom vs. Agricultural Bank of | Gome Telecom vs. Industrial and Commercial | Gome Telecom vs. Bank of China | Gome Telecom vs. China Construction Bank |
| Digital China vs. Chongqing Brewery Co | Digital China vs. Vontron Technology Co | Digital China vs. Dongguan Aohai Technology | Digital China vs. Sinofibers Technology Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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